Hess Reports Estimated Results for the Second Quarter of 2017

Second Quarter Highlights:

Second quarter 2017 pre-tax loss of $425 million reflects
improved operating results compared to the pre-tax loss of $678
million in the year-ago quarter

Net loss was $449 million, or $1.46 per common share, compared
with a net loss of $392 million, or $1.29 per common share, in the
second quarter of 2016, reflecting a lower effective tax rate in 2017
from the required change in deferred tax accounting

Oil and gas production exceeded guidance; total production was
294,000 barrels of oil equivalent per day (boepd), excluding Libya;
Bakken production was 108,000 boepd

Sanctioned the first phase of development for the Liza Field,
one of the industry’s largest oil discoveries of the past decade,
located on the Stabroek Block offshore Guyana (Hess 30 percent); first
oil expected by 2020

Successfully completed Liza-4 well; the recently announced
Payara-2 well confirms a second giant oil field in Guyana and
increases the Payara gross discovered recoverable resources to
approximately 500 million barrels of oil equivalent (boe); gross
discovered recoverable resources for the Stabroek Block now estimated
between 2.25 billion and 2.75 billion boe (Hess 30 percent)

Announced an agreement to sell our interests in enhanced oil
recovery assets in the Permian Basin for total consideration of $600
million

Hess Midstream Partners LP sold common units representing
limited partner interests in an initial public offering for net
proceeds of $365.5 million, of which $175 million was distributed to
Hess Corporation

E&P capital and exploratory expenditures were $528 million for
the quarter and $921 million for the first half of 2017

Cash and cash equivalents were $2.5 billion at June 30, 2017;
$2.7 billion at December 31, 2016

2017 Revised Full Year Guidance:

Net production guidance, excluding Libya, increased to 305,000
to 310,000 boepd, the upper end of previous guidance, even with the
loss of 8,000 boepd of production associated with the sale of our
enhanced oil recovery assets in the Permian Basin scheduled to close
August 1st

E&P capital and exploratory expenditures are projected to be
$2.15 billion, down from original guidance of $2.25 billion

July 26, 2017 07:30 AM Eastern Daylight Time

NEW YORK--(BUSINESS WIRE)--Hess Corporation (NYSE:HES) today reported a net loss of $449 million,
or $1.46 per common share, in the second quarter of 2017 compared with a
net loss of $392 million, or $1.29 per common share, in the second
quarter of 2016, reflecting a lower effective tax rate in 2017 from the
required change in deferred tax accounting. Our loss before income taxes
was $425 million in the second quarter of 2017, compared with a loss
before income taxes of $678 million in the prior-year quarter. The
improved second quarter 2017 pre-tax results reflect higher realized
crude oil selling prices and lower operating costs and exploration
expenses that were partially offset by lower sales volumes. On an
adjusted basis, second quarter 2016 adjusted loss was $335 million, or
$1.10 per common share.

“Our company delivered strong operational performance and achieved
a number of major strategic milestones in the quarter,” Chief Executive
Officer John Hess said. “We continue to take steps to reinforce our
outstanding value-driven growth outlook and drive improving returns and
lower capital and operating costs across our portfolio.”

After-tax income (loss) by major operating activity was as follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

(unaudited)

(unaudited)

2017

2016

2017

2016

(In millions, except per share amounts)

Net Income (Loss) Attributable to Hess
Corporation

Exploration and Production

$

(354

)

$

(328

)

$

(587

)

$

(781

)

Midstream

16

11

34

27

Corporate, Interest and Other

(111

)

(75

)

(220

)

(147

)

Net income (loss) attributable to Hess Corporation

$

(449

)

$

(392

)

$

(773

)

$

(901

)

Net income (loss) per common share (diluted) (a)

$

(1.46

)

$

(1.29

)

$

(2.53

)

$

(3.00

)

Adjusted Net Income (Loss) Attributable to
Hess Corporation (b)

Exploration and Production

$

(354

)

$

(271

)

$

(587

)

$

(724

)

Midstream

16

11

34

27

Corporate, Interest and Other

(111

)

(75

)

(220

)

(147

)

Adjusted net income (loss) attributable to Hess Corporation

$

(449

)

$

(335

)

$

(773

)

$

(844

)

Adjusted net income (loss) per common share (diluted) (a)

$

(1.46

)

$

(1.10

)

$

(2.53

)

$

(2.81

)

Weighted average number of shares (diluted)

314.4

313.2

314.2

306.5

(a)

Calculated as net income (loss) attributable to Hess
Corporation less preferred stock dividends, divided by weighted
average number of diluted shares.

(b)

Adjusted net income (loss) attributable to Hess Corporation
excludes items affecting comparability summarized on page 5. A
reconciliation of net income (loss) attributable to Hess
Corporation to adjusted net income (loss) attributable to Hess
Corporation is provided on page 6.

Exploration and Production:

The Exploration and Production net loss in the second quarter of
2017 was $354 million, compared to a net loss of $328 million in the
second quarter of 2016. On an adjusted basis, second quarter 2016 net
loss was $271 million. The Corporation’s average realized crude oil
selling price, including the effect of hedging, was $45.95 per barrel in
the second quarter of 2017, up from $41.95 per barrel in the year-ago
quarter. The average realized natural gas liquids selling price in the
second quarter of 2017 was $14.85 per barrel, versus $9.03 per barrel in
the prior-year quarter, while the average realized natural gas selling
price was $3.19 per mcf, compared with $3.58 per mcf in the second
quarter of 2016.

Net production, excluding Libya, was 294,000 boepd in the second
quarter of 2017, compared to 313,000 boepd in the prior-year quarter.
Lower volumes were due to a reduced drilling program across our
portfolio, natural field declines, and planned shut-downs in the Gulf of
Mexico. Net production in Libya, which recommenced in the fourth quarter
of 2016, was 6,000 boepd in the second quarter of 2017.

Cash operating costs, which include operating costs and expenses,
production and severance taxes, and E&P general and administrative
expenses, were $14.68 per boe in the second quarter, down 8 percent from
$15.91 per boe in the prior-year quarter. Second quarter 2017 results
included a charge of $15 million related to crude oil hedge
ineffectiveness. The E&P effective tax rate, excluding Libya, was a
benefit of 8 percent in the second quarter of 2017, down from a benefit
of 47 percent, excluding special items, in the second quarter of
2016. Commencing in 2017, we do not recognize deferred tax benefit or
expense in the U.S., Denmark (hydrocarbon tax only), and Malaysia until
deferred tax assets are re-established in these jurisdictions. This
financial reporting requirement has no cash flow or economic impact.

Operational Highlights for the Second Quarter of 2017:

Bakken (Onshore U.S.): Net
production from the Bakken averaged 108,000 boepd, compared to 106,000
boepd in the prior-year quarter. The Corporation operated an average of
four rigs in the second quarter, drilling 23 wells and bringing 13 new
wells online.

Gulf of Mexico (Offshore U.S.):
Net production from the Gulf of Mexico was 51,000 boepd, compared to
54,000 boepd in the prior-year quarter, primarily reflecting lower
production as a result of planned shut-downs, partially offset by higher
production at the Tubular Bells Field. At the Stampede development (Hess
operated - 25 percent), the tension leg platform (TLP) was installed in
the field and hook-up activities commenced. One well has been drilled
and completed, and completion operations are underway on the second and
third wells. First production from the field is expected in the first
half of 2018.

North Malay Basin Full-field Development (Offshore Malaysia):
At the North Malay Basin project (Hess operated - 50 percent), hook-up
of the topsides for the central processing platform was completed in the
quarter and first production of natural gas commenced in mid-July with
commissioning activities ongoing. The field is expected to ramp up net
production to approximately 165 million cubic feet per day during the
third quarter.

Guyana (Offshore): At the
Stabroek Block (Hess - 30 percent), operated by Esso Exploration and
Production Guyana Limited, the partners sanctioned the first phase of
the Liza Field development. This phase is expected to have a gross
capital cost of approximately $3.2 billion for drilling and subsea
infrastructure and will develop approximately 450 million barrels of
oil, with first production expected by 2020. The Corporation’s net
share of development costs is forecast to be approximately $955 million,
of which $110 million is already included in our 2017 capital and
exploratory budget. Of the remaining net development costs,
approximately $250 million is expected in 2018 and approximately $330
million in 2019, with the balance expected in 2020 and 2021.

In June, the operator confirmed positive results from the Liza-4 well
that encountered more than 197 feet of high-quality, oil-bearing
sandstone reservoirs. On July 25th, the operator
announced the successful Payara-2 well, which encountered 59 feet of
high-quality, oil bearing sandstone reservoirs and confirms a second
giant field containing gross discovered recoverable resources of
approximately 500 million boe. Gross discovered recoverable resources
for the Stabroek Block are now estimated to be 2.25 billion to 2.75
billion barrels of oil equivalent.

Midstream:

The Midstream segment, which is comprised primarily of our 50/50
midstream joint venture, Hess Infrastructure Partners (HIP), had net
income of $16 million in the second quarter of 2017, compared to $11
million in the prior-year quarter.

In April, Hess Midstream Partners LP (the “Partnership”)
successfully sold common units representing limited partner interests in
an initial public offering for net proceeds of $365.5 million, of which
$175 million was distributed to the Corporation. The Partnership owns an
approximate 20 percent controlling interest in the operating assets that
comprise HIP, while HIP retains ownership of the remaining 80 percent.
The public unit holders own a 30.5 percent limited partner interest in
the Partnership.

Capital and Exploratory Expenditures:

Exploration and Production capital and exploratory expenditures
were $528 million in the second quarter of 2017, up from $484 million in
the prior-year quarter, primarily reflecting increased drilling activity
(Bakken, Stampede and Norway), partially offset by lower exploration
activity and a reduction in development expenditures at North Malay
Basin.

Liquidity:

Net cash provided by operating activities was $165 million in the
second quarter of 2017, compared to $197 million in the second quarter
of 2016. Net cash provided by operating activities before changes in
working capital was $332 million in the second quarter of 2017, up from
$257 million in the year-ago quarter. Changes in working capital during
the second quarter of 2017 included non-recurring cash outflows totaling
approximately $130 million related to crude oil provided to Dakota
Access Pipeline as line fill, termination payments for an offshore
drilling rig, premiums on crude oil hedging contracts, and prepayments
for frac sand in North Dakota.

At June 30, 2017, the Corporation had cash and cash equivalents of
$2,492 million and total debt, excluding the Midstream segment, of
$6,035 million. The Corporation’s debt to capitalization ratio was 30.9
percent at June 30, 2017 and 30.4 percent at December 31, 2016.

In August, the Corporation expects to complete the sale of its
enhanced oil recovery assets in the Permian Basin for total
consideration of $600 million.

Items Affecting Comparability of Earnings Between Periods:

The following table reflects the total after-tax income (expense)
of items affecting comparability of earnings between periods:

Three Months Ended

Six Months Ended

June 30,

June 30,

(unaudited)

(unaudited)

2017

2016

2017

2016

(In millions)

Exploration and Production

$

—

$

(57

)

$

—

$

(57

)

Midstream

—

—

—

—

Corporate, Interest and Other

—

—

—

—

Total items affecting comparability of earnings between periods

$

—

$

(57

)

$

—

$

(57

)

Second quarter 2016 Exploration and Production results included
after-tax charges totaling $74 million ($119 million pre-tax) associated
with dry-hole costs for a well completed in the prior year and
termination of a drilling rig contract, partially offset by an after-tax
gain of $17 million ($27 million pre-tax) related to the sale of
undeveloped acreage, onshore United States.

Reconciliation of U.S. GAAP to Non-GAAP measures:

The following table reconciles reported net income (loss)
attributable to Hess Corporation and adjusted net income (loss):

Three Months Ended

Six Months Ended

June 30,

June 30,

(unaudited)

(unaudited)

2017

2016

2017

2016

(In millions)

Net income (loss) attributable to Hess Corporation

$

(449

)

$

(392

)

$

(773

)

$

(901

)

Less: Total items affecting comparability of earnings between periods

—

(57

)

—

(57

)

Adjusted net income (loss) attributable to Hess Corporation

$

(449

)

$

(335

)

$

(773

)

$

(844

)

The following table reconciles reported net cash provided by (used
in) operating activities to cash provided by operating activities before
changes in operating assets and liabilities:

Three Months Ended

Six Months Ended

June 30,

June 30,

(unaudited)

(unaudited)

2017

2016

2017

2016

(In millions)

Cash provided by operating activities before changes in operatingassets
and liabilities

$

332

$

257

$

775

$

405

Changes in operating assets and liabilities

(167

)

(60

)

(261

)

(268

)

Net cash provided by (used in) operating activities

$

165

$

197

$

514

$

137

Hess Corporation will review second quarter financial and operating
results and other matters on a webcast at 10 a.m. today. For details
about the event, refer to the Investor Relations section of our website
at www.hess.com.

HessCorporationis a leading global independent energy
company engaged in the exploration and production of crude oil and
natural gas. More information on Hess Corporation is available atwww.hess.com.

Forward-looking Statements

Certain statements in this release may constitute "forward-looking
statements" within the meaning of Section 21E of the United States
Securities Exchange Act of 1934, as amended, and Section 27A of the
United States Securities Act of 1933, as amended. Forward-looking
statements are subject to known and unknown risks and uncertainties and
other factors which may cause actual results to differ materially from
those expressed or implied by such statements, including, without
limitation, uncertainties inherent in the measurement and interpretation
of geological, geophysical and other technical data. Estimates and
projections contained in this release are based on the Corporation’s
current understanding and assessment based on reasonable assumptions.
Actual results may differ materially from these estimates and
projections due to certain risk factors discussed in the Corporation’s
periodic filings with the Securities and Exchange Commission and other
factors.

Non-GAAP financial measure

The Corporation has used non-GAAP financial measures in this earnings
release. “Adjusted net income (loss)” presented in this release is
defined as reported net income (loss) attributable to Hess Corporation
excluding items identified as affecting comparability of earnings
between periods. “Net cash provided by operating activities before
changes in operating assets and liabilities” is defined as Cash provided
by operating activities excluding changes in operating assets and
liabilities. Management uses adjusted net income (loss) to evaluate the
Corporation’s operating performance and believes that investors’
understanding of our performance is enhanced by disclosing this measure,
which excludes certain items that management believes are not directly
related to ongoing operations and are not indicative of future business
trends and operations. Management believes that net cash provided by
operating activities before changes in operating assets and liabilities
demonstrates the Corporation’s ability to internally fund capital
expenditures, pay dividends and service debt. These measures are not,
and should not be viewed as, a substitute for U.S. GAAP net income
(loss) or net cash provided by (used in) operating activities. A
reconciliation of reported net income (loss) attributable to Hess
Corporation (U.S. GAAP) to adjusted net income (loss) as well as a
reconciliation of net cash provided by (used in) operating activities
(U.S. GAAP) to net cash provided by operating activities before changes
in operating assets and liabilities are provided in the release.

Cautionary Note to Investors

We use certain terms in this release relating to resources other than
proved reserves, such as unproved reserves or resources. Investors are
urged to consider closely the oil and gas disclosures in Hess’ Form
10-K, File No. 1-1204, available from Hess Corporation, 1185 Avenue of
the Americas, New York, New York 10036 c/o Corporate Secretary and on
our website at www.hess.com.
You can also obtain this form from the SEC on the EDGAR system.